City’s lawsuit against BPU takes first steps

Some ground was gained Tuesday by the Kansas Municipal Energy Agency and seven cities, including Baldwin City, suing the Board of Public Utilities.

A hearing between the entities was held Tuesday morning in Franklin County District Court. City Administrator Larry Paine said most of the discussion centered around two complaints from the BPU.

The lawsuit seeks to recover $750,000 collected by the BPU under a long-term contract with KMEA for electric power that KMEA, in turn, provides to the cities. The cities allege BPU improperly charged KMEA and the cities last summer for emergency and replacement power supplied by the BPU when the BPU's Nearman generating station was closed because a fire destroyed a coal conveyor at the plant.

Paine said the BPU questioned KMEA's choice of filing the suit in Franklin County. Paine said the case was filed there because Ottawa, one of the cities in the case, sustained the most financial damage. BPU contended the case should have been filed in Wyandotte County.

Judge James Smith upheld KMEA's decision to file the suit in Franklin County.

"BPU asserts that since they are a municipality, we must file in Wyandotte County," Paine said. "Judge Smith ruled that the issue of venue is controlled by prior cases. The basic comment was the venue is proper in Franklin County and any other county because of those cases.

"It makes no difference where the case is filed."

BPU attorneys also alleged that the KMEA did not file the suit properly. The suit was filed against the BPU and Kansas City, Kan.

"They said we needed to serve Wyandotte County, not Kansas City, Kan.," Paine said.

Paine said the suit was amended to be against BPU and Wyandotte County.

A case management conference is scheduled for March 22 in Ottawa. Paine said he expected a timeline to be set for the gathering of information and trial hearings.

"It is a procedural step that allows us to move on," Paine said of Tuesday's hearing. "It is round one of probably 15, but it was a good beginning."

The $750,000 lawsuit figure is a six-city package. If the court grants the cities a reimbursement, Paine said Baldwin customers will be given a reimbursement themselves.

In addition to recovering overcharges from the summer, the lawsuit seeks to prohibit the BPU from using the same pricing formula in future billings.

Baldwin paid up to $2,420 per megawatt-hour for power in late July, compared to the normal price of about $50 per megawatt-hour. Without a reserve fund for such emergencies, Baldwin took out a $300,000 no fund warrant from Baldwin State Bank to pay for the bill.

The expense was passed to Baldwin electric customers, who were billed a surcharge based on usage. The amount was payable in full, or in monthly installments for a year. The average residential customer is paying an $11.50 surcharge per month.